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Restex has a? debt-equity ratio of 0.760.76?, an equity cost of capital of 18 %18%?, and a debt cost of capital of 9 %9%. ?Restex's
Restex has a? debt-equity ratio of
0.760.76?,
an equity cost of capital of
18 %18%?,
and a debt cost of capital of
9 %9%.
?Restex's corporate tax rate is
30 %30%?,
and its market capitalization is
$ 199$199
million.
a. If? Restex's free cash flow is expected to be
$ 5$5
million one year from now and will grow at a constant? rate, what expected future growth rate is consistent with?Restex's current market? value?
b. Estimate the value of? Restex's interest tax shield.
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